Equity Release Cunundrum!!

margaretclare

OK. Let's go back to the beginning, shall we. Been away on holiday and the laptop wouldn't work in all the places we stayed at.

The OP says he is the spendthrift of the family, 2 siblings have managed to clear their mortgages - well done them. Mother's house is 'signed over to the 3 of them'. So, she is living in her own house on sufferance, but paying them the going rate of rent for the area? So the OP is getting a third of the rent, which is taxable? No, I didn't think so.

OP appears to want to raise money against a house he owns a third of, which is lived in by someone else, to repay a loan and - maybe - some more of his 'spendthrift' lifestyle?

To answer the question directly, there's more than one method of equity release, but the one I'm most familiar with is called a 'lifetime mortgage'. Basically the owner/occupier(s) raise a mortgage like any other mortgage, at a variable interest rate - very low at present - but with the option of not paying it off until the decease of one or both occupiers. We did this in 2003 to pay off a mortgage of £45K and it has worked well for us. We saw no point in going on paying a mortgage until we were 83 and we saw an advantage in freeing up the £260 or so every month going on mortgage payments. There can be an advantage in doing this BUT it has to be your own property, not 3 other people's, and in our case, one of us had to have reached at least 68 before we did it. So in the OP's case it's a no-no.

You're 'having difficulty in keeping up with younger members at work'. Rubbish. For the last few years of his working life, up to age 67, DH worked in an internet call-centre alongside people young enough to be his grandchildren. I myself re-trained in my early 60s and did GCSE Maths in my early 70s.

I'm not too sure what the underlying story is here. I surmise that you want money now against what you believe you'll get when Mum dies. You say you're a 'close family', whatever that means, and Mum likes to see you all enjoying the fruits of her labours. Well, OK. I had this conversation a couple of days ago when we met my eldest GD on our way back from holiday. We took her out to lunch and she told the waitress that she's a 'spoilt grandchild'. She's not as spoilt as all that - the price of a meal plus a couple of items she needs for a college course she's doing BUT she is greatly deserving of any help we can give because, far from being a spendthrift, she struggles to stay solvent. She's what is called a 'low-paid worker' and they're the hardest-hit at the moment. Not a spendthrift, not someone with loans and a mortgage who's dissatisfied with work and wants to retire early.

bilbo51

margaretclare wrote: »

OK. Let's go back to the beginning, shall we. Been away on holiday and the laptop wouldn't work in all the places we stayed at.

The OP says he is the spendthrift of the family, 2 siblings have managed to clear their mortgages - well done them. Mother's house is 'signed over to the 3 of them'. So, she is living in her own house on sufferance, but paying them the going rate of rent for the area? So the OP is getting a third of the rent, which is taxable? No, I didn't think so.

OP appears to want to raise money against a house he owns a third of, which is lived in by someone else, to repay a loan and - maybe - some more of his 'spendthrift' lifestyle?

To answer the question directly, there's more than one method of equity release, but the one I'm most familiar with is called a 'lifetime mortgage'. Basically the owner/occupier(s) raise a mortgage like any other mortgage, at a variable interest rate - very low at present - but with the option of not paying it off until the decease of one or both occupiers. We did this in 2003 to pay off a mortgage of £45K and it has worked well for us. We saw no point in going on paying a mortgage until we were 83 and we saw an advantage in freeing up the £260 or so every month going on mortgage payments. There can be an advantage in doing this BUT it has to be your own property, not 3 other people's, and in our case, one of us had to have reached at least 68 before we did it. So in the OP's case it's a no-no.

You're 'having difficulty in keeping up with younger members at work'. Rubbish. For the last few years of his working life, up to age 67, DH worked in an internet call-centre alongside people young enough to be his grandchildren. I myself re-trained in my early 60s and did GCSE Maths in my early 70s.

I'm not too sure what the underlying story is here. I surmise that you want money now against what you believe you'll get when Mum dies. You say you're a 'close family', whatever that means, and Mum likes to see you all enjoying the fruits of her labours. Well, OK. I had this conversation a couple of days ago when we met my eldest GD on our way back from holiday. We took her out to lunch and she told the waitress that she's a 'spoilt grandchild'. She's not as spoilt as all that - the price of a meal plus a couple of items she needs for a college course she's doing BUT she is greatly deserving of any help we can give because, far from being a spendthrift, she struggles to stay solvent. She's what is called a 'low-paid worker' and they're the hardest-hit at the moment. Not a spendthrift, not someone with loans and a mortgage who's dissatisfied with work and wants to retire early.

Just read his other threads and save your cyberbreath.

Mustbeananswer??

bilbo51 wrote: »

Just read his other threads and save your cyberbreath.

Bit viscious....


Spendthrift is leapt upon in this thread....I haven't tried to hide anything.
The whole country is Spendthrift at the moment....thats why we are in a pickle.

I bought my house at what I thought was the bottom of the Market two years ago.I raised the cash to renovate it on short-term credit....with a view to converting it to long-term credit at about this time.I have an excellent credit rating.The Market has dipped again ....unbelieveably.I'm exposed....and looking for answers thats all.
Talking to Santander about a second mortgage....but they are nervous.:eek:

Mustbeananswer??

Further thoughts...

If MY house is worth £100,000 in 2 years when I am 55 how much equity release would I be able to get on it please.The balance on my Mortgage would still be £60,000 as its repayment only.I'm not expecting the figure to be a lot!!;)

Velcro_Hotdog

IF you could get equity release you would have to pay the money lent to you to your mortgage provider IIRC. Someone will correct me if I'm wrong

margaretclare

Mustbeananswer?? wrote: »

Further thoughts...

If MY house is worth £100,000 in 2 years when I am 55 how much equity release would I be able to get on it please.The balance on my Mortgage would still be £60,000 as its repayment only.I'm not expecting the figure to be a lot!!;)

You are unlikely to get ANY equity release at age 55, unless things have moved a lot since we did it. One of us had to be at least 68 before we could raise 25% of the then value.

'The whole country' i.e. the entire population, man, woman and bairn, is NOT 'spendthrift' at the moment! Some are actually struggling to survive on what they earn i.e. live within their income. Don't tar us all with the same brush.

No more talk of your mother's house, then?

somethingcorporate

There is no limit to the number of years the council can go back to identify assets deliberately deprived in order to avoid paying for care. You and your siblings need to be very careful because if your mother goes on to need care then she would likely be treated as still owning this asset.

Mustbeananswer??

somethingcorporate wrote: »

There is no limit to the number of years the council can go back to identify assets deliberately deprived in order to avoid paying for care. You and your siblings need to be very careful because if your mother goes on to need care then she would likely be treated as still owning this asset.

It is unlikely that Mum will go into care.....My Sister would probably step in.It is Mums wish to die in what has been a really happy family home(as my devoted Dad did)...and we'll do everthing to see that that happens.My Sister lives two minuites from Mum.....;);)

Maybe our Family is different....we talk openly about all things ....good or bad:eek::eek:

Andy_Wilson_FS

I'm a new poster here. I will try and answer the questions the original poster raised, and without any vitriolic guesswork and assumptions about his character or motives. I offer the following without any judgement as to the rights and wrongs:

1. If the house has been legally transferred to the three names of you and your siblings, proper 'Equity Release' cannot be arranged. The house has to be occupied by the owner; they also have to be over the age of 55.
2. If the house is still in Mum's name, she could take an equity release scheme. The amount she will get depends on age and the value of the proerty. If you are aged 50, she must be a minimum of 70-ish? At that age she could raise around 32% of the value as a maximum, plus an extra 1% for each year above that age.
3. However, if she did, the debt will rise over the years with compounded interest and could wipe out the value of yours and your siblings' inheritance. Whilst technically they couldn't stop Mum doing it, they would be mad to agree
4. If the house is in your names, you could raise a normal mortgage together even if you have a dependent relative living in there. Not all lenders would do this. Eligibility would depend on the combined incomes and liabilities of the three of you. You may be able to obtain an interest only arrangement too which would keep the debt constant - so little compromise of your siblings inheritance as long as quite a bit less than 1/3rd of the value was raised - your figures seem to suggest this is the case. Mum would be at risk of being evicted if you did not pay the interest and the home was repossessed.

In your defence, many parents of middle aged children would rather like to help them financially when they are still alive rather than when they have died. Many agree with the saying 'A gift is better given from a warm hand'.

Hope this helps.

margaretclare

I did point out much of what you said in my post # 22 above.

It was the OP who admitted to being a 'spendthrift' from the beginning of this thread.

Yes, I agree with you about a 'gift from a warm hand'. That's why I'm happy to help my eldest GD. It's better if they 'show willing' though. I wouldn't give her a penny-piece if she was a 'spendthrift' as the OP admits to being.